Let us consider a passage ending in the mentioned sentence:
It is therefore the relation in knowledge of the reason to its
consequent; whereas true Theism (Spinoza's Theism is merely nominal)
assumes the relation of the cause to its effect, in which the cause
remains different and separate from the consequence, not only in the
way in which we consider them, but really and essentially, therefore
in themselves to all eternity. For the word God, honestly used, means
a cause such as this of the world, with the addition of personality.
An impersonal God is, on the contrary, a contradictio in adjecto.
In broad lines, Schopenhauer points out that an internally coherent theism keeps God and the World separate just like cause and effect. However, pantheism (viz., Spinoza's theism) unifies God and the World and renders God impersonal. In conversation mainly with Kantian thought, Schopenhauer holds that God must not only be separate from the World, but must be personal, that is, a "knowing and willing" individual as well. Hence, an "impersonal God" is an incoherent idea (notice that there is merely a fine distinction between contradictio in adjecto and being an oxymoron; the former one is a logical fallacy, whereas the latter one is more of a rhetorical character.). Thus, Spinoza's theism is only in the name, and indeed, a shy version of atheism.